Stock market today: Stocks fall as investors rotate out of tech into Jackson Hole
Investing.com -- Shares of CrowdStrike Holdings (NASDAQ:CRWD) fell 3% following news that the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) are investigating a $32 million transaction with Carahsoft Technology Corp, according to Bloomberg News. The deal in question, which involved selling cybersecurity tools to the Internal Revenue Service (IRS), is under scrutiny as it was significant enough to potentially affect CrowdStrike’s financial results.
The investigation is examining the specifics of the transaction that was closed on the last day of a fiscal quarter in 2023, a timing which is often critical for companies to meet or exceed market expectations. Notably, the IRS never purchased the products from CrowdStrike’s distributor, Carahsoft, despite the payment. This detail raises questions about the revenue recognition practices of the cybersecurity firm.
The deal’s impact was substantial, as CrowdStrike’s stock price increased by 10% the day after the company reported its quarterly results, which were considered a record at the time. However, the company has not provided explicit details on how the transaction was accounted for in their financial statements.
The DOJ and SEC’s probe into the matter involves interviews and the collection of records related to the deal.
CrowdStrike, headquartered in Austin, Texas, has stood behind its accounting of the transaction. The outcome of the investigation could have significant implications for the company’s financial reporting and market performance. Investors are advised to monitor the developments closely as the investigation proceeds.
This comes after news of Henry Shawn, Chief Security Officer of CrowdStrike Holdings, Inc. (NASDAQ:CRWD), recently selling a substantial number of shares in the cybersecurity company, according to a filing with the Securities and Exchange Commission. The transactions, executed on February 18, involved the sale of 4,000 shares of Class A common stock, amounting to a total value of approximately $1.8 million. Shortly after, CrowdStrike announced Henry’s retirement, effective March 31st, 2025.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.